United Way CEO Fears Washington Impasse Will Slam Charity

By Patrick Cole -
Dec 11, 2012

The fiscal dispute in Washington
weighs heavily on Brian Gallagher, president and chief executive
of United Way Worldwide, the largest U.S. charity.

Gallagher, 53, fears that the nonprofit’s 11 million donors
and the $5.14 billion United Way raises annually might decline
if Congress imposes limits on the amount that can be deducted
for charitable donations on tax returns.

A native of Chicago, Gallagher started working at the
United Way in 1981. I spoke with him over lunch at Bloomberg’s
world headquarters in Manhattan.

Cole: President Barack Obama told Bloomberg Television
recently that eliminating charitable deductions could harm
nonprofits and is “not a realistic option” for reducing the
deficit. Are you less worried now about the law being changed?

Gallagher: I find the comment ironic in that in each budget
he’s proposed to Congress, he’s proposed capping the charitable
deduction for the high wage earners. For the president to say
that he’s a champion of the charitable deduction, I find
interesting.

Cole: You sound skeptical about whether the White House
will protect the interests of nonprofits.

Gallagher: I’ve been in Washington for 10 years now, and
what I’ve learned is that people in Washington know how to stop
things. Democrats know how to do it, Republicans know how to do,
lobbyists know how to do it, nonprofits know how to do it.

Cole: Who can you call in Washington to talk about the
charitable deduction issue?

Direct Line

Gallagher: My direct communication into the White House is
Valerie Jarrett (senior adviser to Obama). I’ve said to her, if
we’re going to have a serious tax-reform conversation, we’re all
in. We’ll have that conversation. If you’re going to try to
cherry-pick the charitable deduction, then we’re going to oppose
it.

What’s interesting and probably good is that the charitable
deduction is now part of the tax-reform conversation. It’s
positive if it’s a long-term comprehensive discussion. It’s
negative if it’s about finding money (to reduce the deficit),
and right now it’s about finding money.

Cole: How do you think donors to nonprofits would react if
charitable deductions are limited?

Gallagher: In our survey, 67 percent of Americans said do
not touch the deduction, and 3 out of 10 Americans use the
deduction when making a charitable gift. The misnomer is that
this has gotten tied up in wealthy people instead of all people.
If you look at who uses it, it is in percentage equal to those
who make $50,000 to $100,000, those who make $100,000 to
$200,000 and those who make $200,000 or more. The debate is that
this is all about millionaires and billionaires. It’s not.

National Fabric

Cole: What worries you most about a decline in charitable
giving?

Gallagher: My biggest concern is that we’re going to start
peeling away at the fabric that made private philanthropy and
private initiative that de Tocqueville wrote about in the 1830s,
which is a part of America. The income gap is as wide as it’s
been since the 1920s. So if you look at philanthropy, the growth
is coming from people who make a lot of money.

Blaming Politics

Cole: What’s to blame for this situation?

Gallagher: Our politics is to blame. What Washington hasn’t
been able to do for a while is figure out how to build a
coalition that actually gets something done.

Cole: Can you predict an outcome?

Gallagher: I believe that taxes really won’t be dealt with
in the lame-duck session. There will be a different solution
going into the next six months of next year, and reform will
happen. Our situation is so dire that folks realize that we have
to do a deal.

(Patrick Cole is a reporter for Muse, the arts and leisure
section of Bloomberg News. The opinions expressed are his own.
This interview was adapted from a longer conversation.)